Critics: Car Dealer Yo-Yo Practices Affect 'Most Vulnerable' Buyers

[As 2013 comes to a close, the ABC News Brian Ross Investigative Unit looks back on its major projects over the last year.]

It's named after a harmless children's toy, but the word yo-yo means something quite different in the car business.

Consumer groups are warning Americans about the growth of so-called yo-yo financing – a practice in which car buyers leave a dealership with their new vehicle even though financing may not be complete. Sometimes the consumer is told later there is a problem with their financing and that they must return the car. Critics say dealers then sometimes pressure the buyer to sign a new, and often more expensive deal.

"Yo-yo might sound like it's making light of the term, but it really is kind of showing you the whole jerking of the consumer back and forth issues that we're concerned about," said Malini Mithal, the assistant director of the Federal Trade Commission's Bureau of Consumer Protection.

"It's very difficult for consumers to have to deal with these types of issues and the FTC is committed to protecting consumers in this area," she told ABC News in an interview to be broadcast tonight on ABC News' "The Lookout."

Consumer groups say customers with credit issues are most at risk. "They are the most vulnerable," said Earl Stewart, a Palm Beach, Florida car dealer who has made it his mission to expose what goes on behind the scenes in the car business.

Jenee Smith of Fort Wayne, Ind., said she was yo-yoed after she bought a used PT Cruiser from a used car dealership.

She said she loved the "kind of jazzy" car, but then about a week after her purchase, she said the dealer called and said the deal was off.

"I figured once I've signed the contract, and he signed it, the deal was done," she said.

ABC News went with Smith when she returned to the dealership, this time wearing a hidden camera. There, the salesman told her the deal had to be re-done because her financing had fallen through. The only catch was, she would have to put down $300 more to keep the car she already thought she owned for a week.

When ABC News questioned the salesman about the change, he claimed Smith signed a document promising to bring the car back if the financing did not go through. But after repeated requests, the salesman refused to produce a copy of the document.

Eventually the dealership's owner appeared and directed the salesman to turn it over, saying that he "has got nothing to hide."

That's when the truth came out – the document was not signed by Smith, but by the salesman himself. Confronted with the facts, the owner did a quick about face and promised to abide by the original deal.

"I'll do it right on TV," he said.

The National Automobile Dealers Association said a vast majority of car deals occur without mistake or incident and the group "condemns fraudulent transactions of any type." The NADA said they were not aware of any evidence that indicated yo-yo transactions are "prevalent in today's marketplace."